The United States determines the official poverty rate using poverty thresholds that are issued each year by the Census Bureau. The thresholds represent the annual amount of cash income minimally required to support families of various sizes.

The methodology for calculating the thresholds was established in the mid-1960s and has not changed in the intervening years. The thresholds are updated annually to account for inflation.[1]

A family is counted as poor if its pretax money income is below its poverty threshold. Money income does not include noncash benefits such as public housing, Medicaid, employer-provided health insurance and food stamps[2].

A sampling of the poverty thresholds for 2010 is included in the table below. A complete list can be found on the Census Bureau's website (www.census.gov).

2010 Poverty Thresholds,
Selected Family Types

Single Individual

Under 65 years

$ 11,344

65 years & older

$ 10,458

Single Parent

One child

$ 15,030

Two children

$ 17,568

Two Adults

No children

$ 14,602

One child

$ 17,552

Two children

$ 22,113

Three children

$ 26,023

SOURCE: U.S. Bureau of the Census, Income, Poverty, and Health Insurance Coverage in the United States: 2010, Report P60, n. 238, p. 61.

Poverty guidelines are a simplified version of poverty thresholds and are issued by the Department of Health and Human Services to determine financial eligibility for certain federal programs. For more information on these guidelines, see the 2011 Federal Poverty Guidelines.

How many people were poor in 2010?

In 2010, 15.1 percent of all persons lived in poverty. The poverty rate in 2010 was the highest poverty rate since 1993. Between 1993 and 2000, the poverty rate fell each year, reaching 11.3 percent in 2000.

How has poverty changed over time?

In the late 1950s, the poverty rate for all Americans was 22.4 percent, or 39.5 million individuals. These numbers declined steadily throughout the 1960s, reaching a low of 11.1 percent, or 22.9 million individuals, in 1973. Over the next decade, the poverty rate fluctuated between 11.1 and 12.6 percent, but it began to rise steadily again in 1980. By 1983, the number of poor individuals had risen to 35.3 million individuals, or 15.2 percent.

For the next ten years, the poverty rate remained above 12.8 percent, increasing to 15.1 percent, or 39.3 million individuals, by 1993. The rate declined for the remainder of the decade, to 11.3 percent by 2000. From 2000 to 2004 it rose each year to 12.7 in 2004.

Since the late 1960s, the poverty rate for people over 65 has fallen dramatically. The poverty rate for children has historically been somewhat higher than the overall poverty rate. The poverty rate for people in households headed by single women is significantly higher than the overall poverty rate.

How does poverty differ across subgroups?

The poverty rate for all persons masks considerable variation between racial/ethnic subgroups. Poverty rates for blacks and Hispanics greatly exceed the national average. In 2010, 27.4 percent of blacks and 26.6 percent of Hispanics were poor, compared to 9.9 percent of non-Hispanic whites and 12.1 percent of Asians.

Poverty rates are highest for families headed by single women, particularly if they are black or Hispanic. In 2010, 31.6 percent of households headed by single women were poor, while 15.8 percent of households headed by single men and 6.2 percent of married-couple households lived in poverty.

There are also differences between native-born and foreign-born residents. In 2010, 19.9 percent of foreign-born residents lived in poverty, compared to 14.4 percent of residents born in the United States. Foreign-born, non-citizens had an even higher incidence of poverty, at a rate of 26.7 percent.

Children represent a disproportionate share of the poor in the United States; they are 24 percent of the total population, but 36 percent of the poor population. In 2010, 16.4 million children, or 22.0 percent, were poor. The poverty rate for children also varies substantially by race and Hispanic origin, as shown in the table below[4].

The official poverty measure has been criticized for not accounting for several factors that can affect a family's economic well-being and for not having been updated, except for inflation, for four decades.

For example, while cash benefits from government assistance programs are included in a family's income when calculating the official poverty measure, benefits received in-kind such as food stamps, Medicare or Medicaid, employer provided health insurance, housing subsidies, and other social services are excluded. Taxes that families pay and tax credits they receive such as the Earned Income Tax Credit (EITC) do not enter into the official poverty determination.

Additionally, the threshold value a family must earn to escape poverty was developed in the 1960s by combining emergency food budget data from the US Department of Agriculture with an estimate of what fraction of income families spend on food. Although the thresholds are adjusted each year for inflation, some analysts believe that these numbers no longer accurately reflect the minimal resources a family requires.

Since 1979, the Census Bureau has published a variety of experimental poverty measures using expanded definitions of income and alternative methods to account for inflation.[5] These alternative measures tend to show lower levels of poverty than the official measure in any year, but the timing of increases and decreases in the poverty rate is very similar across measures. This similarity suggests that, despite the criticism it receives, the official poverty measure provides a reliable indicator of changes in the poverty rate from year to year.

In addition to the Census Bureau's alternatives, a 1995 panel appointed by the National Academy of Sciences (NAS) suggested a series of poverty measures based on alternative definitions of both income and needs (the amount of resources a family needs to escape poverty).[6] The income measures consider taxes paid, tax credits received, some noncash transfers, and deduct medical expenses and work expenses such as childcare and transportation costs. The needs thresholds are derived from a typical family's spending on food, clothing, shelter and utilities and some measures incorporate geographic differences in cost-of-living.

These alternative definitions tend to show higher levels of overall poverty than the official measures in any year, although the difference is usually less than one percentage point. The incidence of poverty across groups also differs under these measures. Single-mother households fare somewhat better and married couples tend to have somewhat higher rates of poverty than when measured using the official methodology. This discrepancy likely results from the differing level of noncash benefits received by these two types of families.

A sample of alternative measures is included in the figure below for years in which they are available. The black line represents the official poverty rate. The blue line represents one of the Census Bureau's alternative measures, which includes food stamps, Medicare, Medicaid and housing subsidies as income. The taxes the family pays are then subtracted, and the resulting net resources are compared to the standard poverty threshold.

The green line represents one of the alternative measures using NAS methodology. This particular series subtracts out-of-pocket medical expenses from a family's income, computes a threshold each year based on consumption data, and adjusts this threshold based on the cost-of-living in different geographic areas.

SOURCE: U.S. Bureau of the Census, Income Alternative Poverty Estimates in the United States: 2003, Report P60, n. 227, Tables B-1 and B-3, pp. 18, 20.

[4] The Census now allows people to report more than one race. In this table, black includes anyone who reported black, whether or not they also reported another racial identity. The same is true for Asian, but not whites. Hispanics can be of any race. The numbers for each subgroup do not add up exactly to the total because subtotals for some groups, including Native Americans and Pacific Islanders, are not available in the Census report